Recent VanTharp's Commentaries
Defining 1R Using Pips
Q: I am eagerly working through The Definitive Guide to Position Sizing. Unfortunately, I am having difficulty calculating 1R. I am a currency trader, so it seems to be easier for me to calculate everything in pips. I do enough intraday-charting; I manually move my stop loss in order to protec...
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Tying Together Weekly and Monthly Reports
Q: While completing the Peak Performance Course I have learned quite a lot about myself and have found some great references. I tend to miss some of the big picture aspects of the market place and am interested in learning more about economic data. I need to gain a better understanding of how t...
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System Testing Programs
Q: Over the years, I've spent a lot of money searching for a plan on how to make money consistently in the market, and for the first time I believe Dr. Tharp's book Super Trader has outlined a great blueprint on how to accomplish that. With that that being said, does Dr. Tharp have a system testi...
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The Four Star Inflation/Deflation Model
Q: I recently read Safe Strategies for Financial Freedom, which I found very useful. Regarding the 1-2-3 model, the last reference I can find is the newsletter dated March 5, 2008. Has the 1-2-3 model been discontinued? If so why, and what has it been replaced with? I also want to understand t...
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An Attitude of Gratitude
I wanted to share a letter from one of our clients with you. Dear Dr Tharp, It is with much gratitude that I write you this letter. I have always loved the markets and once I read about you in Market Wizards three years ago, I knew I wanted to know more about you. As such, I have followed your ...
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Monte-Carlo Simulations and T-Tests
Q: I have developed a trading system using many of your suggestions and it is almost complete. After many trials, errors, and losses, I now understand that exits/stops are more important than entries. I have two questions: In your books you mention using Monte-Carlo simulations to test your sys...
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When Do I Discard a System?
Q: Trading is mostly an internal game—that's one of the ideas I picked up after reading your work. Let's say that we have a couple of great systems (for several market types), we have done the necessary psychological work and we are trading well. Statistically every system/method can (and will) r...
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Calculating %ATR for a Specific Market
Q: I don't completely understand volatility. Dr. Tharp had a %ATR chart in a recent newsletter. Can you detail how he calculates the %ATR for a specific market? A: Van compares today's S&P 500 daily ATR% (20 day period) to the mean of the S&P 500 ATR%’s for all days in about the last 40 years. ...
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Trailing Stops for High-Leveraged ETFs
Q: In your books you recommend the use of a 25% trailing stop. Does it stay the same for high-leveraged ETFs (e.g., 3X)? A: Van recommends the 25% trailing stop as a sort of "last resort" for investors who may not be familiar with stops. If people have nothing beter off of which to base an initi...
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Peak Performance Home Study Course and...
Q: I have bought your two books Super Trader and Trade Your Way to Financial Freedom. I think these two books are full of trading education value when it comes to trading psychology. I am a home-based Intra-day forex trader. Since I'm still learning to trade forex, I'm trading a mini-size account...
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What is SQN?
Q: You use the acronym SQN in your market update. Can you explain what that means? A: After researching position sizing™ strategies for a number of years, Dr. Van Tharp developed a proprietary measure of the quality of a trading system that he calls the System Quality Number® or SQN®. SQN measu...
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Expiration Months in Futures Trading
Q: I just read Trade Your Way to Financial Freedom. It's a great book. It demystified the systems behind successful trading, explaining entry and exit strategies in straightforward language. After reading the book, I have a question I’d like to ask about futures trading: If I’m following several...
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Options and Position Sizing
Q: I am not sure where I originally learned of Dr. Tharp, but I recently listened to an interview by Robert Kiyosaki of Dr. Tharp back in 1998. I consequently have bought two books by Dr. Tharp. One problem that I currently am having is applying the position sizing rules to options. Since the opt...
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Defining Initial R
Q: I have just read your wonderful book Super Trader and it helped me tremendously in my trading business. Just wanted to say thank you for this great book, which gives good advice not only for trading but for one’s entire life. That being said, I have a question regarding 1R in relation to my sy...
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Risk per Trade
Q: In your book, Trade Your Way To Financial Freedom, you state that one of the reasons that many traders go bust is that they don't practice correct position sizing strategies and that most of the beginners are under capitalized. If you are trading equities or stocks, is there a minimum value a...
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